If money doesn’t matter…

Posted on September 20, 2010

A) Then why do private independent schools, like those attended by our President’s children (Sidwell Friends in DC), or by Davis Guggenheim’s children (?), spend so much more than nearby traditional public schools?

I would see little problem with Guggenheim’s personal anecdote were it not for one of the central arguments of Superman being that money plays little or no role in fixing public education systems. Instead, tough-minded superintendents like Michelle Rhee, or charter schools are the solution – money or not.

Again, I’ll fess up to the fact that I am a former teacher at and big supporter of Private Independent Schools. Here’s the school in New York City where I used to teach www.ecfs.org, and here’s its page on tuition: http://www.ecfs.org/admission/tuition.aspx. It was then, and I suspect still is an outstanding example of what a school can be! But that outstanding-ness comes at a price!

(approximately $36,000 per year for middle school and up)

The problem with the assertion that “money wouldn’t help public schools anyway” is that many of those pitching the argument seem themselves to favor private schools that spend more – A LOT MORE – per child than the public schools they are criticizing as failing (speak nothing of the fact that the public schools are serving a much more diverse student population).

Here are some comparisons pulled from my 2009 study on private school expenditures.

First, here’s the per pupil spending in 2005-06 for a handful of major labor markets that had sufficient numbers of Private Independent Day Schools for calculating the averages. My original sample of IRS Tax filings covered about 75% of all Private Independent Day Schools (NAIS or NIPSA member schools), so these are not “outlier” schools.

If money doesn’t matter when it comes to school quality, then why not pick one of those private schools that charges only $6,000 in tuition, and spends $8,000 per pupil? Clearly there is some basis for the decision to send a child to a more expensive private school? There is some “utility” placed on the differences in what those schools have to offer? In the complete report above, I discuss (in painful detail) those differences across private schools, but here, I quickly summarize some of the differences between private independent schools and traditional public school districts.

Private independent schools a) spend a lot more per pupil, b) have much lower pupil to teacher ratios and c) have much higher shares of teachers who attended more competitive colleges. These seem like potentially substantive differences to me. And they are differences that come at a cost.

I am by no means criticizing the choice to provide your own child with a more expensive education. That is a rational choice, when more expensive is coupled with substantive, observable differences in what a school offers. I am criticizing the outright hypocritical argument that money wouldn’t/couldn’t possibly help public schools provide opportunities (breadth of high school course offerings, smaller class sizes) more similar to those of elite private independent day schools, when this argument is made by individuals who prefer private schools that spend double what nearby public schools spend.

Sidebar: I suspect there are few if any private independent day schools out there which currently evaluate their teachers based on student test score gains alone. Please let me know if you know of one? And, I should note that the private independent school where I worked in New York City was actually unionized and had a tenure system in place with a probationary period similar to that of public schools and a salary schedule tied to experience.

B) Then why do venture philanthropists continue to throw money at charter schools while throwing stones at traditional public schools?

Charter school backers like Whitney Tilson love to throw stones at public schools while throwing money at charter schools. Here’s one of his presentations:

On Slide 13, Whitney Tilson opines that increased spending on public education has yielded no return to outcomes over time, and therefore, by extension, increased spending would not and could not help public schools in the future. Tilson is featured prominently in this New York Times article on affluent fund managers in NYC rallying for charter schools: http://www.nytimes.com/2010/05/10/nyregion/10charter.html?pagewanted=all

So, here we have one of many prominent New York City charter school supporters on the one hand arguing that throwing more money at the public school system could not possibly help that system, but on the other hand, providing substantial financial assistance to charter schools (or at least participating in and promoting groups that engage in such activity)?

A New York City Independent Budget Office report suggested that charter schools housed in public school facilities have comparable public subsidy to traditional NYC public schools, but charter schools not housed in public school facilities have to make up about $2,500 (per pupil) in difference. I will show in a future post, however, that student population differences (charters serving lower need populations) largely erase this differential.

Kim Gittleson points out here, that in 2008-08, NYC Charter schools raised an average of $1,654 per pupil through philanthropy. But, some raised as much as $8,000 per pupil. As a result, some charters – those most favored by venture philanthropists – spend on a per pupil basis much more than traditional NYC public schools (including KIPP schools). I will provide much more detail in this point in a future post.

One might argue that the Venture Philanthropists are trying to spend their way to success – To outspend the public schools in order to beat them! After all, it’s the New York Yankee, George Steinbrenner way? (spoken from the perspective of a Red Sox fan, who spent the last several years in Kansas City, supporting the underdog – low payroll – Royals).

But here’s the disconnect – These same Venture Philanthropists – like Tilson, who are committed to spending whatever it takes on charters in order to prove they can succeed, are arguing that public schools a) don’t need and b) could never use effectively any more money. They are trying to argue that charters are doing more with less, when some are doing more with more, others less with less, and some may be doing more with less, and others are actually doing less with more. Shouldn’t traditional public schools be given similar opportunity to do more with more? And don’t give me that … “we’ve already tried that and it didn’t work” claim. I’ll gladly provide the evidence to refute that one, much of which is in the article at the bottom of this post!

C) Then why do affluent – and/or low poverty – suburban school districts continue in many parts of the country to dramatically outspend their poorer urban neighbors?

Last but not least, why do affluent suburban school districts in many states continue to far outspend poor urban ones? If there is no utility to the additional dollar spent and/or no effect produced by that additional dollar then why spend it?

Here is the overall trend, over time in the relationship between community income and state and local revenues per pupil.

When the red line is above the green horizontal line, there exists a positive relationship between district income and state and local revenue. That is, higher income districts have more state and local revenue per pupil. The red line never drops below the green line. This graph, drawn from this article (http://epaa.asu.edu/ojs/article/view/718) shows that state and local revenues per pupil remain positively associated with income across school districts nationally, after controlling for a variety of factors (see article for full detail). Things improved somewhat in the 1990s, but then leveled off.

Here are the trends for mid-Atlantic states, where some including New York State improved, but remain strongly associated with income. New Jersey is the only state among these where the relationship between income and revenue is disrupted and ultimately reversed.

Here’s a specific look at state and local revenues per pupil in New York State districts in the NY metropolitan area, with districts organized by U.S. Census Poverty rates.

FIGURE 8

Is there a reason why Westchester County and Long Island school districts choose to spend so much more than New York City on a per pupil basis? What about those North Shore Chicago area districts?

These communities demand higher expenditures per pupil for their schools on a presumption that the marginal dollar does not go entirely to waste – that there is some value, some return for that dollar, perhaps in the richness of supplemental programs offered or the smaller class sizes – much like the differences in private schools seen above.

Finally, I point you to this recently published article in Teachers College Record, where Kevin Welner and I try to set the record straight on the effectiveness of “reforms” involving state school finance systems. They’re not the “reformy” reforms, but school finance reforms are reforms nonetheless.

Baker, B.D., Welner, K. School Finance and Courts: Does Reform Matter, and How Can We Tell? Teachers College Record

[…] If money doesn’t matter… (via School Finance 101) A) Then why do private independent schools, like those attended by our President’s children (Sidwell Friends in DC), or by Davis Guggenheim’s children (?), spend so much more than nearby traditional public schools? Davis Guggenheim, producer of Waiting for Superman, frequently explains to the media these days that he feels uneasy that he has made a personal choice drive by his neighborhood school each day to bring his children to a private school … Read More […]

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